Abstract

Footnotes (89)

Using the URL or DOI link below will
ensure access to this page indefinitely

Based on your IP address, your paper is being delivered by:

New York, USA

Processing request.

Illinois, USA

Processing request.

Brussels, Belgium

Processing request.

Seoul, Korea

Processing request.

California, USA

Processing request.

If you have any problems downloading this paper,please click on another Download Location above, or view our FAQFile name: SSRN-id1027714. ; Size: 123K

You will receive a perfect bound, 8.5 x 11 inch, black and white printed copy of this PDF document with a glossy color cover. Currently shipping to U.S. addresses only. Your order will ship within 3 business days. For more details, view our FAQ.

Quantity:Total Price = $9.99 plus shipping (U.S. Only)

If you have any problems with this purchase, please contact us for assistance by email: Support@SSRN.com or by phone: 877-SSRNHelp (877 777 6435) in the United States, or +1 585 442 8170 outside of the United States. We are open Monday through Friday between the hours of 8:30AM and 6:00PM, United States Eastern.

The Sarbanes-Oxley Act of 2002 and its enhanced criminal penalties, which increase both the monetary fines and terms of imprisonment, were enacted at least in part to aid the SEC and to fill the perceived enforcement gap in combating corporate fraud. Congress, in so legislating, enlisted a criminal law behavioral model to induce law-abiding corporate behavior. In other words, Congress presumes that people will comply with the law after a conscious evaluation of the risks associated with disobeying the law. Deterrent-based punishments, however, may yield less effective outcomes for corporate fraudsters since some actors do not engage in the requisite cost-benefit assessments before acting. Moreover, even if everyone undertook such an assessment, their subjective beliefs will vary the outcomes. Indeed, a corporate offender's attitude toward risk will differ according to the type of criminal penalties that could be imposed, thereby implicating differing levels of marginal disutility.

This Article analyzes whether this tactic - that of enacting increasingly lengthier prison sentences and imposing higher fines alone - will have the desired effect of deterring potential offenders, and punishing wrongdoers. As will be demonstrated below, reliance on the Act's enhanced criminal penalties to deter wrongdoing may not yield the desired result in light of the many uncontrollable factors that may undermine both the imposition of lengthy sentences and higher fines, and the impact of such penalties on convicted wrongdoers. Consequently, the punishment prong of the costs-benefits analysis must fully extinguish all benefits of the unlawful act in order to fill in the gaps that arise from a sole reliance on deterrent-based punishment. The asset forfeiture sanction effectively removes the economic motive for the criminal conduct from the potential offender's 'benefits' calculation. Any purported benefit from the criminal scheme will be wiped out if the offender is caught. This sanction which removes the economic incentive for the fraudulent scheme also punishes those individuals who either engage in a faulty cost-benefit analysis, or who fail to engage in such an analysis altogether.